My favorite topic, after banking that is, is relationships. This secret (or now not-so-secret) interest of mine is probably driven by the fact that I have become the “go-to” girl for relationship advice among my friends.
After years of counseling friends on their romantic relationships, I’m now turning to banks. Yesterday, I asked myself, “If close to half of serious relationships end in divorce, do banks stand a chance of growing lifetime relationships with customers?” How many millions has your bank spent on CRM, technology, or consulting to achieve lifetime relationship profitability?
Taking the relationship analogy one step further, data shows that “break-ups” become more and more likely once the pain of the first one is experienced. For example, the divorce rate in America for first marriages is 41%, but rises to 60% for second marriages, and, even more disturbing, to 73% for third marriages. Therefore, banks who “steal” customers from their competitors, can only expect those customers to leave them for another provider.
I now propose a new segmentation model based on my relationship experience that will help banks understand the limited opportunity posed by “relationship banking.”
- Segment 1: The Serial Monogamist – The apparently loyal customer who will unexpectedly leave you to immediately form another permanent relationship with a new provider.
- Segment 2: The Player – The customer who will leave you for the “next best offer.”
- Segment 3: “It’s Not You, It’s Me” – The customer who leaves you because “long distance” just won’t work.
- Segment 4: The Manipulator – The customer who threatens to leave you if you don’t forgive their (rightfully earned) fees or match competing offers.
- Segment 5: The Nag – The customer who, at the smallest misstep, is at constant risk for attrition.
- Segment 6: The Cheater – The customer who holds their primary checking account with you, but takes the majority of their balances to other providers.
- Segment 7: The One Night Stand – The customer who wants one thing from you and nothing else.
- Segment 8: Prince Charming – The perfectly loyal customers, who sees you as their primary provider over the course of their lifetime.
As you look across your customer base, do you have enough loyal, lifetime customers to successfully execute a relationship banking strategy?
